Who Goes to Jail When Companies Price-Fix?

The recently filed price-fixing case against Teva Pharmaceuticals USA Division and many other generic drug makers, alleges that the drug-makers conspired to keep drug prices higher. The state attorney generals in 46 states have signed onto the case.

The lawsuit alleges that the makers of generic drugs conspired with their competition to keep drug prices high, and even inflate the prices of some drugs by as much as 1,000 percent. Notably though the lawsuit, though filed by state attorney generals, is a civil matter. After more evidence is uncovered however, it would not be too shocking to see individual criminal charges follow.

Planning to Fix Prices is Illegal and a Conspiracy

While it might sound like a smart business idea to cooperate with your competition at the expense of your customers who have no other options, it's actually illegal as there are laws that prohibit anti-competitive corporate behaviors. However, when companies engage in price-fixing, the individuals who actually planned it can often find themselves free of criminal liability, despite federal law allowing for up to a ten-year prison term.

Generally, in addition to price-fixing, most individuals can also be charged with conspiracy, as by definition, price-fixing requires the participation of more than one person to agree to fix prices. While it may seem like a restriction on the First Amendment, conspiring (or planning) to commit a crime with another person is illegal, usually once either person takes any affirmative step to start the crime (which could be as simple as gathering supplies). Federal conspiracy charges can come with a prison sentence of up to 5 years and fines, just for that charge alone.

Who Gets Charged?

Typically, the individuals within a company who make the ultimate decisions are the ones who bear the liability for the company's actions. Usually, this means that the chief level executives often bear the most risk, as many of these sorts of decisions come from the top and must be authorized by a c-level officer of the company. However, individuals at any level who are involved in the planning and execution could also be held individually liable as well.